Kolkata, Feb 7 (PTI) The repo rate cut of 25 basis points by the monetary policy committee (MPC) of the RBI will give a long-awaited relief on interest rates and support economic growth, according to experts.

Chief Economist of Crisil Ltd, Dharmakirti Joshi, said that as expected, the MPC of the central bank cut rates for the first time on Friday since May 2020.

The repo rate has been lowered by 25 basis points to 6.25 per cent.

Joshi said the recent easing in consumer price index (CPI) inflation and the need to remain supportive of economic growth has moved the RBI to act in this regard.

However, the MPC maintained the policy stance at 'neutral', which gives flexibility to remain data dependent and respond to exigencies, Joshi said.

The MPC moves in the future will depend more on domestic inflation, he said.

"Elevated rates have impacted India's GDP growth, while the budget for the next financial year is mildly supportive of growth, while continuing on the path of fiscal consolidation," he said.

Joshi expressed hope that the MPC would cut the repo rate to another 75 basis points to 100 basis points in the next financial year.

Chief Investment Officer of Axis Securities PMS Naveen Kulkarni said, "The RBI reversed the interest rate cycle by announcing a rate cut of 25 basis points. This was largely anticipated." The GDP growth for the current fiscal has been revised downwards to 6.4 per cent from 6.6 per cent, he said.

"And for the next fiscal, the GDP is expected to be at 6.7 per cent. We could see another rate cut of 25 basis points in the forthcoming meetings of the MPC," he said.

Chairman of the Engineering Export Promotion Council (EEPC) India, Pankaj Chadha, said it welcomes the RBI decision, which will provide support to the economy by driving consumption.

The rate cut, once transmitted by banks, would reduce capital cost for the industry, he said.

"At a time when global headwinds remain strong, there is a need to support the domestic industry in order to neutralise the external challenges,” Chadha said. PTI DC RBT

Repo rate cut signals monetary easing to lower borrowing costs and support economic growth. The central bank's repo rate cut of twenty-five basis points constitutes a monetary easing aimed at lowering borrowing costs and supporting economic activity; the MPC preserved a neutral stance to remain data dependent on inflation and growth. Commentators link the move to easing consumer price inflation, expect transmission through bank lending rates to reduce industry capital costs and boost consumption, and foresee potential further small cuts contingent on domestic macroeconomic developments.